The pro forma results of the fourth quarter and fiscal 2012
reflect the integration of the Wisconsin-based radiation system
maker TomoTherapy, which was acquired by the company in June
2011.

Reported net loss attributable to shareholders in the quarter
was $20.3 million (or 28 cents a share) versus a loss of $25
million (or 40 cents a share) in the prior-year quarter. Controlled
operating expenses along with higher service margins contributed to
improved fourth quarter results.

For fiscal 2012, adjusted loss of 60 cents a share was wider
than the Zacks Consensus Estimate of a loss of 52 cents per share.
The year-ago combined (including TomoTherapy) pro forma adjusted
loss per share was 44 cents.

Reported net loss attributable to shareholders in fiscal 2012
was $72 million (or $1.02 a share) versus a loss of $26.7 million
(or 44 cents a share) in the prior-year quarter.

Cyberknife revenues in fiscal 2012 were lower by $37.6 million
(down 27% year over year) than in fiscal 2011, primarily because of
shipment delays in Europe and lower demand in the American region.
This was, however, partially offset by improved sales in Japan and
Asia-Pacific ("APAC"). On the other hand, TomoTherapy sales were
$5.8 million above fiscal 2011 sales on a pro forma basis.

Orders and Margins

Accuray installed 15 new CyberKnife and TomoTherapy systems
during the quarter, taking the aggregate global installed base to
642 units. The company added $74.2 million of new system orders in
the quarter, leading to a total system backlog of $283.6
million.

Consolidated gross margin (as reported) for the quarter was
36.3% while adjusted gross margin came in at 39.6%. Year-ago
combined pro forma gross margin was 38.8%. Combined adjusted
product and services gross margins were 52.8% and 19.9%,
respectively. Higher service margin (loss of 2.3% in the prior-year
quarter on a pro forma basis) was buoyed by better reliability and
lower service costs of TomoTherapy Systems.

Operating loss was $16.7 million in the quarter compared with a
loss of $25.3 million, a year ago. On an adjusted basis, operating
loss was $11.6 million. Selling and marketing along with general
and administrative expenses were 30.1% of sales versus 56.5% in the
year-ago quarter. On an adjusted basis, selling and marketing along
with general and administrative expenses were 28.6% of sales.

Research and Development (R&D) expenses, as a percentage of
sales, increased to 22.8% from 20% in the year-ago period, based on
the company's plans to introduce two major new products in October
2012 at the American Society for Radiation Oncology's (ASTRO)
Annual Meeting. On an adjusted basis, R&D expenses, as a
percentage of sales, were 22.5% in the fourth quarter.

Financial Condition

Accuray exited the quarter with cash and cash equivalents of
roughly $143.5 million, up 49.6% year-over-year. Long-term debt was
$79.5 million in the quarter. The company had no debt in the
year-ago quarter.

Guidance

Accuray expects adjusted revenues in the range of $405 million
to $425 million in fiscal 2013. The company also forecasts first
quarter fiscal 2013 sales to be considerably lower than the
year-ago quarter. However, it expects revenues to increase from
there on. This is mainly due to the potential delay in
shipments and a significant backlog of TomoTherapy orders in the
prior-year quarter.

In addition, the company expects to achieve 20%-22% adjusted
service gross margin for fiscal 2013. Accuray anticipates returning
to profitability by the end of fiscal 2013.

Accuray is a global leader in the field of radiosurgery and
provides a non-surgical treatment option for patients diagnosed
with cancer. Globally, more than 200,000 people have been treated
with the company's technology.

Accuray continues to enjoy healthy demand for its CyberKnife
radio-surgery system as evident by the sustained growth in the
number of patients receiving treatment with the device. Moreover,
the acquisition of rival TomoTherapy has bolstered the company's
foothold in the radiation oncology space.

However, Accuray remains susceptible to the weak U.S. and
European markets, reimbursement uncertainties and faces stiff
challenges from competitive product offerings of
Varian Medical
(
VAR
) and
Integra LifeSciences
(
IART
). We are currently Neutral on the stock, which carries a Zacks #3
Rank (short-term Hold rating).